Is European Leftism compatible with the Euro and the EMU?

2015-07-11

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Greek Prime Minister Tsipras won the parliament’s support for proceeding with negotiations to agree on a third rescue package for his country. The reform proposals include a series of painful austerity measures, which are quite similar to those put forward by the creditors. Though the proposal received the backing of the vast majority of deputies, the governing coalition itself did not manage to pass the 151 threshold. As Paul Mason sums it up:

So overnight the Greek bailout offer passed 250 Yes, 32 No. But from 162 govt MPs, 8 abstentions, 7 absent, 2 no. More later

— Paul Mason (@paulmasonnews) July 11, 2015

Mr. Tsipras’ government may remain in power, either following a reshuffle or due to internal Syriza arrangements between deputies and their party, where MPs are basically committed to pass on their seat if they disagree with the government.

The Prime Minister has no viable alternatives. His course of action is the only pragmatic one under the circumstances. However, in this very context “pragmatism” is not necessarily compatible with “leftism”, as the reform proposals suggest.

Given this state of affairs and notwithstanding the creditors’ expected stance, i.e. to ask for extra measures, I wish to address the titular question, which I consider it to be a persistent one: is European Leftism compatible with the Euro and the EMU?

For reasons I already detailed in my latest analysis, I find it hard to answer anything other than “NO”. Leftism and the Euro cannot go hand in hand. My stance concerns the “what it is” of the Euro; it is not about the “what it could be”. These are two distinct topics, one is the actual, the other the normative.

As concerns the Euro’s actuality, the single currency is but one in a multitude of factors peculiar to Europe’s Economic and Monetary Union that establish a “neoliberal” economic character and outlook.

The mandate of the ECB is narrowly focused on price stability (inflation targeting), without any commitment whatsoever to other major socio-economic indicators such as, say, unemployment. The ECB’s stance is so rigid in fact, that it did what no modern central bank would do: force a bank run and a concomitant collapse in the money supply on a banking system over which it is supposed to be its lender of last resort.

Further, the legal framework of the EMU on fiscal and economic policy is quite clearly an anti-keynesian monolith. It also calcifies a specific economic regime for repressing direct and indirect labour costs (aka “competitiveness”).

This quality is not intrinsic to a single European currency or monetary union. There is nothing in the nature of things that forces the Euro/EMU to be what it is. This has been the end product of the balance of authority in Europe over the past decades. Conservatives or, more generally, non-Syriza-like leftists have framed the agenda and, courtesy of the pseudo-permanency of European rules, they have set their worldview in stone until the day they choose to change it through inter-governmental deliberations, occurring against the backdrop of circumstantial power relations.

Given Mr. Tsipras’ effective U-turn and the fact that the regime of austerity proposals rejected in the July 5 referendum will be repackaged and introduced anew, we may also consider a more sensitive question: _is the euro, as it currently stands, compatible with democracy? _It is, though only with political positions that do not run against the EMU architecture. So if you are Syriza or other radical leftist party, and the vast majority of euro area Member States do not belong to your political family, that means “NO”.

I believe the European Left is facing a very specific set of trade-offs that it will eventually have to deal with:

1. economic: sacrifice true keynesianism (or similar views) to the altars of fiscal discipline, or remain committed to tight fiscal targets and to “competitiveness” at the expense of abandoning its own principles regarding wealth concentration, the role of finance, labour relations etc.;
2. political: submit to the EMU’s model of “common rules without common politics”, whatever that may imply for its popular mandate, or, take a realistic—though not principled—position against the Euro/EMU.

These are my honest words, as a pro-european and a leftist (ecologist to be precise). For the “here and now” in Greece, we may indeed submit that Mr. Tsipras’ position is pragmatic. Anything other than a third bailout programme will lead to far greater a calamity. There is no credible plan B (and why hasn’t there ever been one?).

If I see it right, the tough choices are not circumstantial. They are germane to the EMU’s design, in what it is and what it is expected to become. Though I would rather pretend to be oblivious to the facts, I fear that pro-europeans who happen to be leftists—the present author included—will one day be forced to scrutinise their own views, and to choose either in favour of leftism _or _pro-europeanism.